Family Law Property Settlements and Consent Orders.
When a relationship breaks down it can be a very stressful and overwhelming time in our life and often, we are too emotional to think about property settlement. But it is important to consider your personal and financial affairs when your relationship breaks down. Often there are assets and debts of the relationship that will need to be split between the parties and this can be confusing as to who should get what and who pays for what.
There are a number of ways you can decide how to divide your assets and debts.
- You can AGREE on how you would like your assets and debts divided without any involvement of the Court.
- If you AGREE on how you are going to divide your assets and debts, you can formalise these by applying for what is called Consent Orders in the Family Court or by entering into a Binding Financial Agreement (BFA).
- If you CANNOT agree you can apply to the Court for financial orders, including orders relating to property and payment of spousal or de facto partner maintenance.
What is Property?
Property is all assets that are under the ownership OR control of either person of the relationship. This can be real estate, cars, bank accounts, shares, vehicles, boats, financial resources, and interests in Trusts may also form part of the property pool. Superannuation is also considered property; however, it is a different type of property and is dealt with by way of a “splitting order”.
There is no set formula on how to divide your property, and the way your assets and debts will be divided will depend on the individual circumstances of your family. Any agreement or division of property will be determined in a way that is ‘just and equitable’ based on the facts and circumstances of your case. You will not have the same property settlement outcome as someone else you may know as their circumstances will be different to your own.
The Family Law Act 1975 (Cth) (the Act) sets out the general principles that the Court considers when making any adjustment to property. For married couples these are set out in s79(4) and s75(2) of the Act and for de facto couples these can be found in s90SM (4) and s90SF (3) of the Act. These principles are based on:
- Your assets and debts;
- The direct financial contributions each party has made to the relationship;
- The indirect financial contributions each party has made such as gifts and inheritances;
- The non-financial contributions each party has made to the relationship such as caring for children, homemaking; and
- Future requirements of the parties. The Court will consider age, health, financial resources, ability to earn income and care of the children if there are any.
Where to start.
A good way to start is to try and reach an agreement with your ex-partner. There are also mediation and arbitration programs available to assist parties to reach an agreement on property. If you cannot agree and have tried some form of dispute resolution, then the next step would be to make an application to the Court. For more information on this, contact the team here at Miller Sockhill Lawyers and speak to one of our friendly staff.
There are strict time limits which apply in property settlement matters so it is something that should be started sooner rather than later.
- For married couples, the application MUST be made within 12 months of your divorce becoming final.
- For de facto couples’ applications must be started within 2 years of the breakdown of the relationship.
If you do not make an application within these time limits then you will need to get permission from the Court to apply and you will need to show the Court why they should grant you permission. This is not always granted so it is better to seek legal advice as soon as you can regarding your property settlement.
When an application is made for a property settlement, it is important to remember the assets you have at the time of the application are the assets considered by the Court, not the assets and debts that you had at the time the relationship ended. This is important because you may purchase a house some months after the relationship ended or receive an inheritance from a family member or even win the lottery. All these things become part of the property pool when your application is made. This is one of the reasons why it is prudent to deal with the division of property as soon as possible after separation.
If you agree on how to divide your property, the best and most cost-effective way to formalise your agreement is through Consent Orders. An application for Consent Orders must be filed through the Family Court. Your agreement is prepared and submitted through the Court and is reviewed very carefully. If the proposed settlement is just and equitable then the Orders will be made, and they will become binding on both parties.
The benefits of Consent Orders means there is no need to appear in Court, it is less time consuming, more cost effective, and they have the added benefit of avoiding stamp duty or capital gains tax before the transfer of any assets.
If the Court considers the proposed settlement is not just and equitable it will be requisitioned. All parties will then be required to attend to the identified errors and if the error is serious, the entire application will need to be redrafted and submitted. This will increase the time needed to reach an outcome and increase the costs to all parties.
Some common misunderstandings we get asked about are:
- The assets and debts brought into the relationship are excluded from the property pool? It is a factor that is considered when dividing property.
- A Trust is a way to hide assets from your spouse or partner.
No. Trusts are considered property and will be dealt with accordingly in the division of property.
- My Uncle left money to me in his will. This is not included in our asset pool.
Incorrect. Any inheritances or gifts received will be treated as property for the purposes of the property settlement and the Courts will take this into consideration when determining any adjustment to be made.
- Property overseas is outside the jurisdiction and cannot be included.
Incorrect. Just because one party may own property or have a financial resource outside of Australia does not prevent it from being included in the property pool.
- I am entitled to receive a portion of my ex-partners superannuation and will get this as a cash payment.
Incorrect. It is not mandatory that superannuation is included in a property settlement. However, if it is dealt with in your property settlement application it is generally done by way of a splitting order. This means any amount made in your favour is transferred directly to your superannuation fund and is held in trust under the applicable superannuation laws.
- It was not my fault the relationship broke down so I should get more of the division of property.
No. this is incorrect, and it does not matter whose fault it was or what the reasons were that one party left the relationship. A property settlement will be made that is just and equitable in consideration of all relevant facts and circumstances of your individual case.
If you have reached an agreement regarding your property settlement, contact the friendly team at Miller Sockhill Lawyers and we can offer a fixed fee for the preparation of your Consent Orders if there are no children under 18 of the relationship and can discuss our fees for other circumstances.